PMT / Personal Finance

Calculate Monthly Car Loan Payments

I want to know how much I need to pay monthly for a $30,000 car loan over 5 years at 4% interest.

formula.xlsx
=PMT(B2/12, C2*12, -A2)

How it works: The PMT function calculates the payment for a loan based on constant payments and a constant interest rate. We divide the annual interest rate (B2) by 12 to get the monthly rate and multiply the loan term in years (C2) by 12 to get the total number of monthly payments. The loan amount (A2) is entered as a negative value because it represents the present value (an inflow to the borrower) that needs to be paid back, ensuring the PMT function returns a positive payment amount.

Data Setup

Loan Amount Annual Interest Rate Loan Term (Years)
30000 0.04 5

Step-by-Step Guide

1

Enter the total loan amount ($30,000) into cell A2.

2

Enter the annual interest rate (4% or 0.04) into cell B2.

3

Enter the loan term in years (5) into cell C2.

4

In a separate cell (e.g., D2), enter the PMT formula: `=PMT(B2/12, C2*12, -A2)` to calculate the monthly payment.

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